Eastern Economic Journal

, Volume 44, Issue 2, pp 273–285 | Cite as

Prudence and Different Kinds of Prevention

Article

Abstract

This paper examines the effect of prudence on the optimal choices of advance and contemporaneous prevention in a context where the two kinds of prevention are used together. We show that, under some conditions on the probability of loss occurrence, prudence tends to increase advance prevention and to reduce contemporaneous prevention, while imprudence tends to do the opposite. Further results on the effect of prudence/imprudence on agents’ optimal behavior are provided.

Keywords

prevention prudence self protection advance prevention contemporaneous prevention 

JEL

D81 

Notes

Acknowledgments

The author would like to thank Louis Eeckhoudt, Richard Peter, two anonymous referees and the Associate Editor Diego Nocetti for their useful comments and suggestions. The usual disclaimers apply.

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Copyright information

© EEA 2016

Authors and Affiliations

  1. 1.Dipartimento di EconomiaUniversitá di ParmaParmaItaly

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